Free is generally considered to be a good thing: who doesn’t want something for nothing? But there are situations when free can spell trouble. Free can be so expensive sometimes that you really can’t afford to take it, no matter how appealing a prize, a giveaway or a present might be. Here are five situations to watch out for.
- When you have to live up to your prize: If you win a free trip to the beach, you may need to buy a swim suit. If you win a free stay at a hotel, you may need to buy airplane tickets. If you win a fancy sports car, you may need to buy more insurance. For many things you could get free, that gift or prize is just the first domino. You might find a whole slew of purchases you need to make just to enjoy something you didn’t have or expect a few days ago. It’s worse if the gift is far out of the ordinary for you. Most of us can come up with a swim suit pretty easily, but what if you win a trip down the red carpet for something big? Coming up with an appropriately fancy outfit may be a very different matter.
- When you have to buy something even bigger: Have you ever gotten one of those phone calls that promises you a free trip to somewhere amazing? The catch is often that you have to sit through a sales pitch for an even fancier trip. Such situations are set up to pressure you into purchasing something much bigger for the privilege of getting something free. Unless you are absolutely sure that you won’t say yes to something you would never pay for otherwise and that there’s some way to get out of it, the free gift can end up being far too expensive.
- When there are taxes involved: There are television shows now that go around giving houses to deserving families. In most cases, though, the fact that those families are deserving (which can be read as poor), means that the likelihood they can keep those brand new houses is not as high as you’d hope. After the camera crews roll away, every one of those families gets hit with a tax bill for the increased value of their home, whether that’s on the county appraisal level or because the IRS assessed that the house is a prize and therefore subject to tax — or both. Depending on where you live and what you’re getting for free, the tax burden may be as much as half the fair market value of your prize.
- When you don’t want or need something, but take it anyway: My grandfather has a hard time driving past a piece of furniture out in the street, available for free. He’ll pull over, look at it and try to take it home, more often than not. It’s because it’s free and nothing available for free should be passed up. When my grandparents were ready to downsize into a smaller home, they had to clear out a four-car garage my grandfather had filled with his finds, costing time and money. My grandmother certainly could have done without all of that ‘free.’
- When you wind up with something that just sits: I’ve brought home free books that I’ll never read, computer parts that I’ll never install and other bits and bobs that were free to a good home. These items are hard to turn down because they’re free, but that doesn’t mean that they don’t have a price tag. Just the time I’ve spent dusting them, boxing and unpacking them for moves, and reorganizing them to squeeze one more thing on a shelf mean that they cost plenty in just the time I’ve spent on them. And they aren’t free to keep, either. They take up shelf space in apartments and houses that I’ve paid for and impacted the size of the places I’ve chosen. If I had gone with the option of a smaller space and a storage unit, the cost would have been even higher.
These five situations only brush the surface of the issue of getting something that seems to be free. When you’re offered something for nothing, you don’t want to be ungrateful, but you do want to dig a little deeper to make sure you can truly accept it without potential problems surfacing.
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{ read the comments below or add one }
Here is one more – when it takes your time to get said prize.
Remember all those time shares free trips that was all the rage a few years ago? Who want to sit in a time share sale for half a day when you’re on vacation?
I’ve absolutely found that going to timeshare presentations in exchange for whatever ($100, show tickets, etc) are almost always unreasonably negative experiences, especially if you tell the salesman right from the get-go that you’re not interested in buying (while it’s kind of lame for him to give his shpiel to unresponsive ears, it’s kind of lame for him to be surly to me about it).
One time, in Las Vegas, my wife and I lost a couple hours to a timeshare presentation who wouldn’t even give us the free gift! When they were bussing us to the presentation, the promoters repeatedly said that it would only take an hour. However, when we met the salesperson, and we explained to her that we expected to be done in an hour, she refused to go along with it, and, therefore, the company refused to give us our “free” gift.
If you have the time and the patience, you can get some good stuff from timeshare promotions, but if you value your time and don’t like being lied to, then I agree with the post – the opportunity is too expensive.
I used to feel badly when my dad would walk past timeshare promoters without looking or talking with them; I really don’t feel that way anymore.
Great perspective. I never really think about the taxes that would come with winning a big prize. Most folks don’t. Glad you mentioned that to put things in perspective.
Your post is right on. I am SHOCKED at how many “free” opportunities catch my fancy. When we’re in the car my husband literally puts blinders on me so that I won’t beg him to stop and pick up whatever happens to be on the side of the road that day. I know they’re not free but resale shops are also a minefield of impulsive purchases. I can get five pairs of sunglasses for three dollars, but do I need five? Clutter is a time killer and these are great ideas to save time and money. Thanks for posting!
My work recently had several boxes of things like phones, computer and power cables, monitors, and other various electronics that they were going to recycle and mentioned it was up for grabs if anyone wanted it. I like free stuff too, but after looking through it and realizing that even though those items seemed useful, I would probably never use them, I just took a few things that I knew I would use and left the rest.
The guy who just caught Derek Jeter’s 3,000th career hit is feeling the pain of accepting all of those goodies the Yankees gave him. In taxes it could end up costing him a lot. He probably should have just sold the ball back to Yankees and use the money from that transaction to pay taxes and then purchase the goodies they offered him.